The Double Taxation Relief (Taxes on Income) (Morocco) Order 1991

Explanatory Note

(This note is not part of the Order)

Under the Convention with Morocco scheduled to this Order shipping and air transport profits (Article 8), certain trading profits not arising through a permanent establishment (Article 7), non-governmental pensions (Article 18) and the earnings of temporary business visitors (Articles 14 and 15) are, subject to certain conditions, to be taxed only in the country of the taxpayer’s residence. Where an enterprise which is a resident of one country carries on business through a permanent establishment in the other, the profits of the enterprise which are attributable to that permanent establishment may be taxed in that other country (Articles 5 and 7).

Income derived by public entertainers from their personal activities may normally be taxed in the country in which those activities are exercised (Article 17). Governmental remuneration and pensions are normally to be taxed by the paying Government only (Article 19). Certain payments made to visiting students, apprentices and trainees are, subject to certain conditions, to be exempt in the country visited (Article 20).

Income from immovable property (Article 6) and capital gains (Article 13) arising from the disposal of such property or from shares in a company whose assets consist mainly of such property may be taxed in the country in which the property is situated. Capital gains arising from the disposal of movable property are normally to be taxed only in the country of the taxpayer’s residence unless they arise from the disposal of assets of a permanent establishment or a fixed base which the taxpayer has in the other country (Article 13).

Where income continues to be taxable in both countries relief from double taxation is to be given by the country of the taxpayer’s residence. The credit to be given in the United Kingdom for tax payable in Morocco is to include credit for tax spared under certain provisions of Moroccan law (Article 22).

Dividends paid by a United Kingdom company to a resident of Morocco are to be exempt from any tax in the United Kingdom which is chargeable on dividends. (Under the imputation system of company taxation in the United Kingdom there is no tax withheld from dividends). Where dividends are paid by a Moroccan company to a resident of the United Kingdom the tax charged in Morocco is not to exceed 10 per cent where the dividends are paid to a company which controls at least 10 per cent of the capital of the company paying the dividend and 25 per cent in all other cases (Article 10).

The rate of tax to be imposed by the country of source on interest paid to a resident of the other country is, in general, not to exceed 10 per cent. Interest received by or on behalf of a Contracting State is to be exempt from tax in the country of source (Article 11).

The rate of tax in the country of source on royalties (including management, technical or consultancy fees) paid to a resident of the other country is not to exceed 10 per cent (Article 12).

There are also provisions for safeguarding residents of one country from discriminat-ory taxation in the other country (Article 23) and for the exchange of information and consultation between the competent authorities of the two countries (Articles 24 and 25).

The Convention takes effect in the United Kingdom for years of assessment beginning on or after 6th April 1981 and financial years beginning on or after 1st April 1981 (Article 27).